To unwind or not to unwind? ECB president Mario Draghi has moved closer to pressing the ‘Not’ button. The release of the European Central Bank minutes earlier today indicated Draghi is increasingly sympathetic to snipping central bank stimulus – cheap money – if the inflation picture improves.
The euro surged as a result, up +0.4% at 3.45pm edging close to $1.1400. The pound languished at $1.2939, just 0.04% up in contrast. An impressive performance by the euro given that stronger US services data emerged earlier today: ISM non-manufacturing data – a big chunk of this is from the US services sector – came in at 57.4 points. Quite a bit higher than expected (any reading above 50 is an expansion).
Stock markets did not respond well to more signals from central banks of an end – end of an era? – of cheap cash. The Dow was solidly down at the start of trading this morning, slipping -0.41% while the tech-laden Nasdaq slumped almost 1% to under 6,100 points.
- UK FTSE 100 7,337.28 -0.41%
- Dow 21,368.38 -0.50%
- S&P 500 2,416.41 -0.66%
- Nasdaq 6,094.90 -0.91%
- Nikkei 225 19,994.06 -0.44%
- DAX 12,376.29 -0.62%
- CAC 40 5,149.14 -0.60%
- Gold 1,223.00 +0.11%
- Oil WTI 45.80 +1.48%
UK incomes tumble Jan-March
Feeling the pinch? You’re not alone. The Office for National Statistics (ONS) says disposable income for many UK households continues to slip. After benefits, tax and other take-outs, real spending income fell 2% between January and March 2017.
While that may appear modest at first glance, it’s the biggest ‘real life’ slump for five years. Though wage stagnation is a contributory factor, it’s goods and services prices that deliver the killer blow. Particularly food. Yesterday the British Retail Consortium (BRC) warned that more supermarket prices rises are inevitable.
Some steadying of price inflation in June said the BRC, was a “brief hiatus” resulting from a combination of short term pricing influences and general longer term competitive pressures. “We expect shop price inflation to continue trending upwards in coming months," it warned.
EU-Japan deal sends warning shot to Trump
Elsewhere the European Union and Japan have agreed a new free-trade deal though little detail is known currently. An ebullient Donald Tusk, president of the European Council, couldn’t help give off a certain schadenfreude.
“We did it,” reported the BBC. “We concluded EU-Japan political and trade talks. EU is more and more engaged globally.” The deal is huge – the agreement represents approximately 30% of all global trade – and means a stripping away of many tariffs.
Japanese cars and European food and drink exports look set to gain in particular. The deal also fires a firm statement of intent to President Trump: No Protectionism Here. And all on the eve of a German G20 summit…tomorrow.
The FTSE 100 ended 30 points lower at 7,337.28 with Barclays and ABF the two main climbers, up 2.42% and 2.40%. Glencore and Fresnillo fell 2.49% and 2.38%.
Breaking news: Qatar Airways snaps up 4.75% American Airlines (AA) stake. Qatar Airways says they want to bite off more if AA is willing.